Ford Sollers lauds Russia supplier improvement
"If the Russian government can help then great but that should not be the basis of the automotive competitive industry" - Ford Sollers VP purchasing Rob Harrison
Ford Sollers says it has seen consistent improvement in the Russian supplier sector, but adds the industry cannot rely on Moscow alone to help it through the current challenging period.
The Russian government confirmed it would support the automotive sector again in 2016 through a series of interest rate subsidies and investment credits, in a package that will see RUB50bn (US$729m) pumped into the sector, but Ford Sollers says the supplier industry must also look to itself.
"We can't simply look to the Russian government to solve the ills," Ford Sollers VP purchasing, Rob Harrison told just-auto on the sidelines of this year's Russian Automotive Forum (RAF) organised by Adam Smith Conferences in Moscow.
"We have to look within our own automotive structure first and put our own cost structure in order. If the Russian government can help then great, but that should not be the basis of the automotive competitive industry. We have to control our own cost first.
"Let's keep the things we can in our own hands. Cost competitiveness is where we need to have the advantage strategically. Even if the government were to offer some incentives, that would be on a short term basis. We need to drive efficiency into the supply value chain.
"It would be great to get some assistance from the government, but I think we need to drive efficiency from ourselves first."
The Ford Sollers purchasing VP was at pains to highlight the "tremendous progress" made by Russian suppliers in recent times, with domestic component makers providing heads, blocks, pistons and spark plugs to its facility in Tatarstan for example, which is now fully operational.
Suppliers also needed to play their part in cooperating with OEMs, added Harrison in order to drive efficiency.
"Operating practices need to be met by suppliers with the help and assistance from the OEMs," he said. "We provide tremendous support with the supply base, but it needs the commitment of the supply base to achieve this.
"The risk that underpins localisation, we need to work to mitigate those risks. If we can work with all of these factors and deliver improvements, then localisation by itself becomes more and more achievable and efficient.
"We can't be victims of the economy. Rather than just saying the economy is too weak, there are things we can do in our own control, which help improve and offset those issues. What we are looking for is [supplier] ingenuity so we can run multiple products down the same production line."
Harrison also called for Tier 1 suppliers to continue the development of the Tier 2 component base. "Tier 2 suppliers need to come forward to the OEM or to the Tier 1 supplier to offer components in order to take advantage," he said. "The OEMs can't drive it by themselves.
"Fifty per cent of T2 content can be targeted for localisation. From a supplier development perspective, we have got close to 60 suppliers we are working with locally."